supplement to the second report - fti consulting
TRANSCRIPT
COURT FILE NUMBER 1201-16124
COURT COURT OF QUEEN’S BENCH OF ALBERTA JUDICIAL CENTRE CALGARY
PLAINTIFF NATIONAL BANK OF CANADA
DEFENDANT SOLARA EXPLORATION LTD.
DOCUMENT SUPPLEMENT TO THE SECOND REPORT OF FTI CONSULTING CANADA INC., IN ITS CAPACITY AS COURT-APPOINTED RECEIVER AND MANAGER OF SOLARA EXPLORATION LTD.
February 14, 2014 ADDRESS FOR SERVICE AND RECEIVER CONTACT INFORMATION OF FTI Consulting Canada Inc. PARTY FILING THIS 1000, 888-3rd Street S.W. DOCUMENT Calgary, AB T2P 5C5 Deryck Helkaa/Dustin Olver
Telephone: (403) 444-5362/ (403) 444-5383 Fax: (403) 444-6758 E-mail: [email protected]
COUNSEL Blake, Cassels & Graydon LLP 3500, 855 – 2nd Street SW Calgary, AB T2P 4J8
Kelly J. Bourassa/Ryan Zahara Telephone: (403) 260-9697/ (403) 260-9628 Fax: (403) 260-9700 Email: [email protected]
INTRODUCTION
1. On December 19, 2012, FTI Consulting Canada Inc. was appointed receiver and
manager (the “Receiver”) of the assets, undertakings and properties of Solara
Exploration Ltd. (“Solara” or the “Company”) pursuant to the order (the
“Receivership Order”) of this Honourable Court.
2. As described in the Receiver’s First Report dated November 1, 2013, the Receiver
entered into an asset purchase and sale agreement with Incipient Exploration Ltd.
(the “Incipient PSA”) dated October 28, 2013 for the sale of Solara’s Assets. The
Incipient PSA was subject to Court approval.
3. On November 7, 2013 the Honourable Justice Hawco granted an Order (the
“Approval and Vesting Order”) inter alia approving the Incipient PSA.
4. To date, the Receiver has filed one report on various aspects of the Receivership.
Receiver’s reports and other information in respect of these proceedings are
posted on the Receiver’s website at http://cfcanada.fticonsulting.com/solara/.
5. The purpose of this supplement to the Receiver’s Second Report (the
“Supplementary Report”), is to inform the Court on the following:
(a) Proof of claims received by the Receiver on behalf of Penn West
Petroleum Ltd. (“Penn West”) and Anterra Energy Inc., subsequent to the
Receiver Filing its Second Report; and
(b) A revised Recovery Analysis and Proposed Distribution.
6. Unless otherwise stated, all monetary amounts contained herein are expressed in
Canadian Dollars.
7. Capitalized terms not otherwise defined herein have the meanings set out in the
Receivership Order and previous Receiver’s Reports.
PROOF OF CLAIMS
8. On February 11, 2014 Burnet, Duckworth and Palmer LLP (“BDP”) submitted a
proof of claim on behalf of Penn West (the “Penn West Claim”) asserting an
unsecured and a secured claim against Solara as described below and attached as
Appendix “A” to this Supplementary Report.
(a) An unsecured claim of $1,098,824.14 as a direct result of Solara’s failure
to pay the accounts of contractors for work performed and materials
supplied to the joint lands. As a result, a number of contractors filed
builder’s liens against the joint lands;
(b) A trust claim of $53,135.11 for unpaid royalties accrued prior to the date
of the Receivership pursuant to a Farmout and Royalty Agreement (the
“Royalty Agreement”). Pursuant to the Royalty Agreement Penn West is
entitled to an overriding royalty for all production from the farmout lands
identified in the Royalty Agreement; and
(c) A subrogated trust claim of $84,650.45 for unpaid crown royalties owed
by Solara which Penn West, as joint lessee, was jointly liable and paid to
Alberta Justice after the date of the Receivership.
9. On February 12, 2014 BDP submitted a proof of claim on behalf of Anterra (the
“Anterra Claim”) asserting a secured claim against Solara as described below and
attached as Appendix “B” to this Supplementary Report.
(a) Pursuant to a Farmout Agreement with Anterra, and associated
documents, Solara had earned an interest in the Farmout Lands and post-
earning Anterra became the operator of the wells on the Farmout Lands;
(b) Solara was unable to pay its share of the operating expenses to Anterra as
operator of the lands and on July 31, 2012 Anterra issued a default notice
to Solara under the CAPL operating procedure that it was exercising its
operator’s lien remedy to recover amounts outstanding; and
(c) As a result Anterra claims $276,654.58 as a secured claim for Solara’s
failure to pay Anterra amounts due and owing to Anterra as operator.
REVISED RECOVERY ANALYSIS AND PROPOSED DISTRIBUTION
10. The Receiver has completed a revised recovery analysis and proposed interim
distribution reflecting the proposed holdback for the Pennwest Claim and the
Anterra Claim as presented below. The interim distribution identified below is
intended to replace the proposed interim distribution in the Receiver’s Second
Report.
Recovery Analysis and Proposed Distribution ($s)
Funds Available for Distribution
Cash on Hand 2,332,414
Holdbacks
Anterra Claim 276,655
Penn West Claim 137,786
Final Statement of Adjustments 100,000
GST 51,031
Costs Associated with Claims 50,000
Operating Expenses 50,000
Professional Fees 50,000
Other Priority Claims 30,000
Total Available for distribution 1,586,943
Proposed Distributions
Proposed Interim Distribution to National Bank 1,181,975
Proposed Distribution to Lien Holders 368,131
County of Vermilion Amended Proof of Claim 36,837
Net funds available for unsecured creditors (0)
11. The Receiver will report further to this Honourable Court with respect to the
Anterra Claim and the Pennwest Claim once further review has been completed.
RECEIVER’S RECOMMENDATIONS
12. The Receiver recommends holding back appropriate funds to resolve these claims
and associated costs until such time as the claims are settled of the Receiver is
further directed by this Honourable Court.
13. The Receiver recommends that this Honorable approve the interim distribution as
set out in the table above.
All of which is respectfully submitted this 14th day of February 2014.
FTI Consulting Canada Inc. in its capacity as receiver and manager of the assets, property and undertaking of Solara Exploration Ltd.
Name: Deryck Helkaa Title: Senior Managing Director,
FTI Consulting Canada Inc.
APPENDIX “A”
PENN WEST CLAIM
APPENDIX “B”
ANTERRA CLAIM
